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Address of

Marriner S. Eccles
Board of Governors
of the
Federal Reserve System

at the
58th Commencement
of the

Utah State Agricultural College

Logan, Utah
Monday, June 4, 1951


President Madsen, members of the gradu­
ating class, members of the faculty, distinguish­
ed guests: I deeply appreciate the honor of de­
livering the Commencement Address at the
Utah State Agricultural College in what for
many years was my home town of Logan. More
years ago than I care to admit I was ushered in­
to this life at the home of my grandmother,
which stood at the corner of Main and 3rd
North. That house is no longer there, but like a
traveler returning to his homeland after a
long, interesting, often exciting, sometimes
difficult journey, I am always refreshed and
invigorated by the familiar sights and faces
that I see about me in Logan.
I accepted the invitation to address you at
this Commencement with the usual misgivings
that assail anyone who is supposed to utter
words of wisdom before the younger genera­
tion. For my part, the mistakes of my and pre­
ceding generations, which led to two world
wars and, in between, the greatest economic
depression in recorded history, seem to belie
any words of wisdom. For your part, of course,
you have little choice except to sit here and
endure the ordeal. I shall not pretend that I
can give you words of wisdom, but I can speak
from experience— that hard taskmaster from
whom we may at least learn how to avoid mak­
ing the same mistakes in the future that we
made in the past.
The mistakes of this century have been
made at a time when we have witnessed the
greatest technological and scientific progress in
all history. Before W orld W a r I we imagined
that we could live in a world apart, that we
could have peace and prosperity at home while
Western Europe engaged in a titanic struggle,
the outcome of which we could look upon with
a detached neutrality. W hen late in the day
it became clear to us that our own survival
as a free nation might also be at stake we
were willing to throw all we had into the bat­
tle under the slogan of making the world safe
for democracy. Then we sank back into what
we thought would be a period of comfortable
“normalcy” . W e talked of an unending era
of an easy peace and abundance. Virtually
all the nations of the world solemnly outlawed
war. So sure were we that the world had in­


deed been made safe for democracy that the
democratic nations disarmed. The few men of
vison, like Churchill, who warned of the gather­
ing storm went unheeded.
The new era of prosperity collapsed with a
suddenness and a completeness that few fore­
saw. Mr. Hoover complained, not without jus­
tification, that the Jeremiahs, the prophets of
disaster, only appeared after the event. W e
were as bewildered by the causes of this great­
est of all depressions as we were undecided
what to do about it. The watchword of that
day was “balance the budget and restore con­
fidence” , an empty and since exploded concept
if ever there was one.
W hen
plunged the world into another vast conflict
we were still a divided nation, preponderantly
believing, or at least hoping, that we could
again stand aside and have business as usual
at home while most of the rest of the world
fought to the finish. W e had not even then
learned how to conquer the problem of unem­
ployment, how to distribute the abundance that
our industrial, technological, as well as agri­
cultural, skills could produce.
There were
some 10 millions seeking work while we were
still at peace. Men spoke of the paradox of
poverty in the midst of plenty. And today’s
paradox is that huge defense expenditures ap­
pear the only cure for mass unemployment and
industrial stagnation.
The common fault and cause of these
failures of the past lies not in our democratic
institutions, not in our ability to produce and
distribute goods, but in our thinking.
failure is not due, as yet, to insufficient ma­
terial resources or to any lack of scientific and
inventive genius in the world; it is due to our
inability to deal with the basic causes of polit­
ical and social upheavals abroad that lead to
war, in which we inevitably become involved,
and to our failures at home to find any answer
except war or preparation for war, to the prob­
lem of distributing our abundance which is so
coveted by the communist world. It is easy
to blame our democratic, political institutions
but I venture to say the trouble lies not so much
with these institutions as in our failure to adapt
those institutions to the needs of the modern
world. Our economic thinking has not kept


pace with material and scientific progress. Our
thinking about world problems still seems to me
to be too unrealistic. W e are too prodigal in
diverting our human and material resources
to military preparations for war and defense,
and too conservative about using them to allev­
iate human misery on which communism and
aggression both feed. After W orld W a r II, as
after W orld W a r I, the democratic nations
were in a position to establish the foundations
for a durable peace and they have failed mis­
erably to do so. The paradoxes to which I
have referred are paradoxes only because we
have not been able to think and then act in­
telligently in the light of experience and the
cold facts of realities in the world today.
You are undoubtedly bored with the truism
that you will have to grapple with, and solve,
the problems inherited from your elders. All
I can say to you is that you won't solve them
wisely unless you think about them more realisticly than has characterized much of our
thinking in the past few decades. Presumably
what you have been taught here, above all,
is how to think. Some years ago I was asked
whether I did not believe that public officials
should have more time to think, and in reply I
“ I have known a good many men who
think they think but who, for the most part, are
merely echoing opinions or prejudices they have
heard over the luncheon table or with which they
have grown up. Or they parrot the customary
talk of the trade or occupation they happen to
be in.
“ In Government particularly those in pos­
itions of great responsibility ought to have a
comprehensive understanding not merely of
their own department or speciality, but of the
entire economic and political scene at home
and abroad if they are to make intelligent
policy decisions. Few men in public life have
anything like a global view of affairs.
“ It is not enough just to organize one's
time in order to be free to think. You have
to know how to think, how to assemble and
relate facts, which are so often elusive. And
then if the thinking is to amount to anything,
there must be character and courage, the will­


ingness to make decisions and to make enemies,
and to face inevitable opposition/*




There is a growing cynicism in the world
today, especially among the young people—
cynicism resulting from the human failures
which have lead to the tragic conditions existing
throughout the world. I noted in a recent New
York Times book review the comment that
some contemporary authors contend that ‘life
has no discernible direction or purpose, that
ideals are illusions, that common values have
disappeared, and that a sensitive person is
bound to be destroyed or corrupted in a mod­
ern society in which common values have dis­
appeared” . Having frankly admitted that my
generation has made many mistakes, I still
say from my own personal experiences that life
has both discernible direction and purpose, that
ideals are not illusions, that common values
have not disappeared, and that a sensitive person need not be destroyed or corrupted by modern society. Those of us who view the present and future with cynicism must strive to
regain a proper perspective. W e must not let
the events of the moment obscure the illustri­
ous record of the progress of civilization. W e
must not, as Tennyson once wrote, let “ the
hills of time shut out the mountains of etern­
Notwithstanding our mistakes our nation
has flourished and our free enterprise system
of democary has provided us with by far the
highest standard of living of any nation on
earth. Unlike some countries that I could name
where the rich have been getting richer and
poor have been getting poorer, our own develop­
ment during the past two decades has been
just the opposite. W e have gone far toward
bringing about a more equitable distribution,
than was the case 20 years ago, of the goods
and services which we as a nation can produce.
In 1929 the highest 5 per cent of all income
recipients obtained 34 per cent of the total na­
tional income, while, at the present time, they
receive but 18 per cent of the total. Mean­
while the share of total income received by
those in the lower income classes has increased
proportionately. This means that we have in
the years since 1929, accomplished one of the
great social revolutions of history, a revolution


that has developed gradually and has been,
and will continue to be, of great benefit to
our entire nation.
The fact that such a redistribution of in­
come has been effected without social un­
rest and upheaval or dislocation of our pro­
ductive activities is in itself an eloquent test­
imonial to our economic, social, and political
W h ile recognizing and paying tribute to
the advantages of our type of society, we must
not lose sight of its shortcomings and failures,
particularly in its relationship to other nations
of the world. W e have talked loudly in foreign
capitals about the advantages of democratic
capitalism, but we have failed to convince our
foreign listeners by our action. Take for ex­
ample, the serious situation in Iran, which
could touch off another world war. A n author­
ity, commenting upon this situation, recently
‘ ‘Unfortunately, as things balance up for
the Iranians, the possible economic conse­
quences of their actions do not weigh very
heavily. They do not feel they have much to
lose. This is the W e st's great failure. Onceproud Persia is a poor, backward, stagnant,
fuedal land, haphazardly governed by a few
rich families. Here resentments, deep and bit­
ter, are compounded by religious antagonism.
They lead, inevitably, to a rabid nationalist
sentiment, subscribed to alike by the political
right and left. Iran is a classic example of the
colonial area which capitalism has left rotten
ripe for communism. The British and ourselves
have talked a lot about helping to improve the
lot of the average Iranian. Talk is about as
far as it has gone.”
In Iran, China, Korea, Indo-China and
elsewhere we and the other countries of the
Western W o rld have failed singularly to pro­
vide the tangible benefits of democratic cap­
italism that would have averted the spread of
communism. Instead, we have given our bles­
sing and backing to reactionary governments
that lack the confidence and support of the
people. W e have failed to realize that a large
part of the world is in a state of economic re­
volution which we view as communist inspired
and try to buy off with dollars or settle through


war. W e must recognize that the communists
can only exploit the conditions that will con­
tinue to exist unless we ourselves, in our for­
eign policy, deal with the underlying causes
of a world-wide revolution. A s Supreme Court
Justice Douglas has said:
“ American foreign policy never has been
addressed to the conditions under which these
revolutions flourish. W e send technical ex­
perts to help in seed selection, soil conserva­
tion, malaria controls and the like. But we
never raise our voices for reforms of the vicious
tenancy system . . . under which increased pro­
duction works to the benefit of a few. W e
talk about democracy and justice, and at the
same time we support regimes in those coun­
tries whose object is to keep both democracy
and justice out of the reach of the peasants
for all time.”
Democratic capitalism, if it is to survive,
must hold its own against communism, by
works rather than by words, in the undevelop­
ed backward areas of the world. Talking alone will not win many converts to the demo­
cratic cause— only by bringing them the tang­
ible benefits of increased agricultural and in! dustrial production, more efficient methods of
distribution, and greater equality of income can
we expect the underprivileged masses of the
world to forsake the glittering but never ful­
filled promises of communism.
Those who
complain that the cost of such a program
would be exhorbitant must remember that we
never hesitate to spend for war or defense
whatever may be necessary, but we become
relatively tight-fisted in our civilian expendi­
tures for maintaining the peace of the world.
This country alone spent over 400 billion dol1 lars to win W o rld W a r II, and is now embark­
ed on a defense program that will cost 50 to
60 billion dollars a year for an indefinite per­
iod of time. Yet, wars never solve any of the
world's problems; but only accentuate them.
W ill the world never learn, before it is too
late, to use the resources that are wasted on
war or defense against war for the benefit
of the people of the world in an effort to erad| icate the basic causes of war and the need for
In addition to finding ways and means for


sharing the material benefits as well as the
ideals of democracy with the other nations of
the world, we must face up to what is perhaps
the most fundamental problem of all— over­
A biologist, Julian Huxley, has
said “ human population is probably the great­
est problem of our time . . . we need a positive
population policy for the world as a whole and
for each of the nations in it. Such a pop­
ulation policy will be in the highest degree
moral, in stressing the wickedness of allowing
future generations to be born in increasing mis­
ery and permitting the entire race to suffer
genetic degeneration.”
W e cannot hope to improve the lot of the
common man in China, India, Japan or any of
the other over-crowded and under-developed
nations of the world if the only check on the
number of their inhabitants is the availability
of food.
The existence of large masses of
people subsisting at starvation levels is an open
invitation to revolution and communism, since
most people will try to fight their way out of
a bad situation before they will willingly starve
to death. Such improvements in the standard
of living as the democratic system of produc­
tion and distribution of the western world might
provide, would, in the absence of a positive
population policy, quickly be dissipated among
the rapidly increasing numbers of people. Even
in our own country we may well be facing in
time a serious problem of over-population if our
present percentage rate of population growth
continues. A t that rate the United States alone
would have, within 150 years, more people than
the present population of the entire earth.
The two basic causes of world conflict—
rapidly growing population and consequent in­
adequacy of the means of production and dis­
tribution necessary to feed and clothe such
numbers of people— must be dealt with realis­
tically in many areas of the earth if peace is
to be established and maintained. Misguided
idealism must not be allowed to obscure the
need for hard-headed realism in dealing with
the basic causes of war. W h ile we have adapt­
ed the laws of nature to serve our own ends in
the realm of the physical sciences, we have
chosen to ignore or neglect such adaptation
in the social sciences. It has been said: “ W e


live in a Universe which stands for no non­
sense from anyone and which orders us to
play not the fool but the man in solving our
Since we failed in the past to remedy the
basic causes of word conflict, we find our­
selves today confronted with an immediate and
pressing need for providing more adequate na­
tional defense in an effort to forestall the out­
break of another world war.
However, we
must recognize the fact that our defense pre­
paredness program is at best a temporary and
transitional solution— a means of deterring war
while we strive for achievement of a more per­
manent solution of the fundamental problems
that lead to war. Another global war would
mean total war with atomic and all other wea­
pons of destruction, and likely could not be won
by anyone; on the contrary, it might well lead
to the destruction of civilization itself. I be­
lieve that the people of the world, including
the Russian masses, are against war, because
modern war places every man, woman, and
child in the front line of battle, exposing them
to suffering and hardship beyond the limits of
human endurance. W arfare today has obliter­
ated the meaning of space and time— land dis­
tances and ocean barriers no longer afford pro­
tection; the whole earth has been encompassed
into a relatively small neighborhood. W e must
not, therefore, allow ourselves to think of war
as inevitable, for, to quote from a recent editor­
ial, “ out of another war would come such an
abomination of destruction and annihilation,
such a desolate aftermath of woe and upheaval,
such sorrow and revulsion everywhere that the
only happy people would be the dead people."
W e must be resolute in our determination
to prevent war; we must design and carry out
a defense preparedness and foreign aid pro­
gram which will deter the Russian leaders from
starting a third world war. In doing so we
must choose our strategy and weapons of de­
fense carefully with an eye upon their cost as
well as their effectiveness, in order that we do
not destroy the very system our program is
designed to protect. This can happen by per­
mitting further deterioration in the purchasing
power of the dollar and weakening our de­


fenses by squandering our resources of manpower and materials.
This means a program which we are able
and willing to pay for currently, since it must
be sustainable for an indefinite period of time.
The Kremlin's hope, of course, is that through
our failure to control inflation we will accomp­
lish the destruction of our own economic and
political system and make the communist con­
quest of the United States both cheap and
easy, just as inflation paved the way for Hit­
ler's rise to power in Germany. From a poli­
tical standpoint, inflation that leads to economic
bankruptcy is the most powerful instrument ol
communist infiltration.
In order to utilize our resources of man­
power and material most effectively we should
rely primarily upon overwhelming control of
the air and the sea for the purpose of deterring
communist aggression, and we should conserve
our manpower for use where it is most effective
— in our production lines. W e cannot afford to
become further embroiled with land armies on
the continent of Europe or Asia. W e should
recognize the facts that our unrivalled produc­
tive capacity is our strongest line of defense,
that our ability to produce is largely determined
by our available manpower, and that our coun­
try is the arsenal and keystone of the free na­
tions of the world.
I have sought to face the great, the inesca­
pable problems, as I see them, which are a
challenge to our best thought and our character
as a nation today. W e can defeat ourselves
by cynicism, by faintheartedness, and by fail­
ure to think clearly and boldly. W e can suc­
ceed if we will have the courage, the character,
the unconquerable spirit and the vision which
inspired the forefathers of our nation. Your
forebearers and mine who came to these moun­
tains and valleys in their covered wagons and
created from the desert wastelands this fertile
and prosperous State did not waver in the
face of danger and difficulty. In the founding
of their nation and the extension of its fron­
tiers, our people overcame obstacles which
loomed quite as large then as those with which


we are confronted now. W e would do well to
remember what St. Paul said to the Romans:
“W e glory in tribulations; knowing that
tribulation worketh patience; and patience, ex­
perience; and experience, hope/'
(Romans 5 :3 -4 )
The great playwright, Robert Sherwood, in
commenting on this quotation, had this to say:
“ After the outbreak of the Second W orld
W a r — after the Nazis invaded Poland and the
Red Army invaded Finland— I quoted those
words of St. Paul's, and Alfred Lunt spoke
them in the play, ‘There Shall Be N o N ight/
Those were times of tribulation indeed, and
far worse tribulations were soon to come, and
those words were given supreme test.
there were men of faith— men who could say,
‘I have nothing to offer but blood, toil, tears
and sweat/ or ‘The only thing we have to
fear is fear itself— and this patience bred ex­
perience, and experience bred hope and event­
ual victory.
“ Again we are in times of (great) trib­
" W e should do well to remember that St.
Paul's words of eternal reassurance are still
available to men and women of (vision and)
I could do no better, in conclusion, than
to quote from an address of a great leader—
W oodrow W ilso n — speaking at Swarthmore
College in October 1913:
“ How many of you will volunteer to carry
the spiritual message of liberty to the world?
How many of you will forego anything ex­
cept your allegiance to that which is just and
that which is right? W e die but once, and we
die without distinction if we are not willing
to die the death of sacrifice.
“ Do you covet honor? You will never get
it by serving yourself. Do you covet distinc­
tion? You will get it only as the servant of
mankind. Do not forget, then, as you walk
these classic places, why you are here. You
are not here merely to prepare to make a living.
You are here to enable the world to live more
amply, with greater vision, with a finer spirit
of hope and achievement. You are here to en­
rich the world and you impoverish yourself
if you forget the errand."